ProdukHukum BankIndonesia

(1)

To

ALL COMMERCIAL BANKS

BASED ON SHARIA PRINCIPLES IN INDONESIA

Subject :

The Rating System for Commercial Banks Based on Sharia

Principles

_____________________________________________________

Following the enactment of Bank Indonesia Regulation No. 9/1/PBI/2007 dated

January 24, 2007 regarding The Rating System For Commercial Banks Based On Sharia

Principles (State Gazette of the Republic of Indonesia Number 31 of 2007, Supplement to

the State Gazette of the Republic of Indonesia Number 4699), it is necessary to stipulate

the implementation in a Bank Indonesia Circulation Letter with following principal

provisions:

I.

GENERAL PROVISION

1. The increase in the types of Sharia Banking products and services has inluence

the business complexity and the bank risk proile based on Sharia Principles. In

order to make sharia bank can manage the bank risk effectively, methodology

of rating system meeting international standards is needed. The rating system

for sharia bank is in interest of related parties including Bank Indonesia. For

a sharia bank, the result of the rating system may be applied as an instrument

for management to make decision for the bank future management policy. For

Bank Indonesia, the result of the rating system may be applied by the supervisor

in applying the right supervisory strategy in the coming years.

2. The calculation of the rating system has taken into account inherent risk in the

bank activities.

(2)

4. The inancial factor assessment is conducted by giving weight to the factor

rating of the capital, asset quality, earnings, liquidity and sensitivity of the

market risk.

5. Assessment on capital factor, asset quality, earnings, liquidity and sensitivity of

the market risk is conducted by using quantitative and qualitative assessment

and judgement.

6. Ratios that applied to calculate the ranking factor for capital, asset quality,

earnings, liquidity and sensitivity of the market risk are classiied into key

ratio, supporting ratio and observed ratio. The key ratio is ratio that has a high

impact on the rating system, while the supporting ratio is ratio that has directly

inluence on the key ratio, and observed ratio is additional ratio that used in

analysis and judgment.

7. Assessment on the management factor is conducted by using qualitative

assessment for each aspect of the general management, risk management and

compliance management. The result of management factor assessment consists

of:

a. result of the general management factor assessment relecting the good

corporate governance application in the bank;

b. result of the risk management factor assessment relecting the risk

management, including risk control system (RCS) for inherent risk in each

bank activities;

c. result of the compliance management factor relecting the implementation

of provisions, which are in accordance to the prudential principle and

Sharia Principles in a bank.

(3)

of the respective assessment factoras.

II. COVERAGE OF THE RATING SYSTEM

The Bank Rating assessment include assessment on factors consisting of:

1. Capital

Capital assessment is intended to evaluate the bank capital adequacy to secure

position risk exposure and to anticipate risk exposure, that may arise.

Quantitative assessment of capital factor is conducted by assessment on the

following components:

a. Suficiency in meeting the Capital Adequacy Ratio (CAR), is the key

ratio;

b. Core capital ability and Allowances for Possible Losses (PPAP) in securing

write-off risk, is a supporting ratio;

c.

Core capital ability to cover losses at the time of liquidation, is a supporting

ratio;

d. CAR trend /growth, is a supporting ratio;

e.

A bank internal capability to add capital, is a supporting ratio;

f.

Intensity of the agency function of a sharia bank, is an observed ratio;

g. Core capital compared to a mudharabah fund, is an observed ratio;

h. Dividend Pay Out Ratio, is an observed ratio;

i.

Access to capital sources (external support), is an observed ratio;

j.

Financial performance of shareholders to increase the bank capital, is an

observed ratio.

2. Asset quality

Asset quality assessment is intended to evaluate the bank asset condition,

including anticipation on risk of non-payment from inancing (credit risk) that

(4)

a.

A bank productive asset quality, is the key ratio;

b. Risk of concentrating fund distribution to main debtors, is a supporting

ratio;

c.

Fund disbursement quality to main debtors, is a supporting ratio;

d. A bank ability to handle / to recover write-off assets, is a supporting ratio;

e. The amount of non performing inancing, is a supporting ratio;

f.

Collateral Adequacy Level, is an observed ratio;

g. Projection/growth of productive assets quality, is an observed ratio;

h. Growth/trend of restructured trouble productive assets, is an observed

ratio.

3. Earnings

Earnings assessment is intended to evaluate a bank capability to generate

proit.

Earnings factor quantitative assessment is conducted by assess the following

components:

a.

Net operating margin (NOM), is a key ratio;

b. Return on assets (ROA), is a supporting ratio;

c. Operational eficiency ratio (REO), is a supporting ratio;

d. Income generating assets ratio, is a supporting ratio;

e. Income diversiication, is a supporting ratio;

f.

Projection of Net Revenue (PPBO), is a supporting ratio;

g. Net structural operating margin, is an observed ratio;

h. Return on equity (ROE), is an observed ratio;

i.

Fund placement composition in securities/money market, is an observed

ratio;

(5)

provided by a sharia bank, is an observed ratio;

n. Investment fund ratio, is an observed ratio;

o. Writen-off funds distribution compared to operational expense, is an

observed ratio;

4. Liquidity

Liquidity assessment is intended to evaluate the bank capability to maintain an

adequate liquidity level, including anticipation on liquidity risk that may arise.

Liquidity factor quantitative assessment is conducted by assess the following

components:

a.

The amount of the short term asset compared to the short term liability, is

a key ratio;

b. Capability of short term asset, cash, and secondary reserve to cover short

term liability, is a supporting ratio;

c.

Dependency on main deposit fund, is a supporting ratio;

d. Growth of main deposit fund to the total fund of third parties, is a supporting

ratio;

e.

The bank capability in obtaining funds from other parties in the case of

mismatch, is an observed ratio;

f.

Dependency on inter bank fund, is an observed ratio;

5. Sensitivity to market risk

Sensitivity to market risk assessment is intended to evaluate the bank inancial

capability to anticipate market risk changes due to luctuation in exchange

rate.

Sensitivity assessment to market risk is conducted by assess the excessive

amount of capital to cover a bank risk compared to the loss risk amount arising

from the effect of market risk changes.

6. Management

(6)

compliance to Sharia Principles and bank commitment to Bank Indonesia.

The management factor qualitative assessment is conducted by assess the

following components:

a.

General management quality related to good corporate governance;

b. Quality of risk management implementation;

c.

Compliance to regulation related to prudential principles and also

compliance to Sharia Principles and commitment to Bank Indonesia.

III. PROCEDURE TO ASSESS THE RATING SYSTEM FOR COMMERCIAL

BANKS BASED ON SHARIA PRINCIPLES

Assessment of the rating system for commercial banks based on sharia principles is

conducted as follows:

1. Ranking assessment and / or stipulation of each ratio / component referred

in number II are conducted quantitatively for inancial ratio referring to

Attachment 1a, Attachment 1b, Attachment 1c, Attachment 1d, and

Attachment 1e. Whereas management component is conducted qualitatively

referring to Attachment 1f.

2. Ranking stipulation on each factors of capital, asset quality, earnings and

liquidity are conducted by referring to Factor Rating Stipulating Criteria Matrix

as stated in Attachment 2a, Attachment 2b, Attachment 2c, Attachment 2d,

and Attachment 2e

by considering supporting indicators and / or relevant

judgment including observed ratio based on materiality aspect and signiicance

of each components;

(7)

Factor Rating and Management Factor Rating using the conversion table by

considering supporting indicator and judgment element by referring to the

Composite Rating Stipulating Criteria Matrix in Attachment 5.

The conversation table for Composite Rating calculation is as follows:

A

B

C

D

4A

4B

4C

4D

3A

3B

3C

3D

2A

2B

2C

2D

1A

1B

1C

1D

5

4

3

2

1

Manajemen

Finansial (CAELS)

4

3

2

1

5

5A

5B

5C

5D

Table

Notes:

PK 1

= 1A, 1B

PK 2

= 1C, 2A, 2B

PK 3

= 1D, 2C, 2D, 3A, 3B. 3C

PK 4

= 3D, 4A, 4B, 4C, 4D

PK 5

= 5A, 5B, 5C, 5D

6. In conducting the rating stipulation process referred above, a Bank must use

working paper as described in Attachment 6 of this Bank Indonesia Circulation

Letter.

IV. ASSESMENT RESULT

Based on the assessment result of the each factors, the Composite Rating is stipulated.

The Composite Rating is stipulated as follows:

1. Composite Rating 1, shows that a Bank and UUS are assessed as very good

and able to overcome the negative effect of economic condition and inancial

(8)

Bank and UUS still has minor weaknesses which can be overcame by routine

actions;

3. Composite Rating 3, shows that a Bank and UUS are assessed as quite good but

there are still some weaknesses which may detrimentally affect the composite

rating if the Bank and UUS does not immediately conduct corrective actions;

4. Composite Rating 4, shows that a Bank and UUS are assessed as not good and

sensitive to negative effect of the economic conditions and inancial industry or

the bank and UUS have serious inancial weaknesses or combination of several

factor conditions which are not satisfying, that can be detrimental if no effective

action are taken and may endanger the business continuity;

5. Composite Rating 5, shows that a Bank and UUS are assessed as very sensitive

to the negative economic condition inluences, the inancial industry, and

experience dificulties endangering the business continuity.

V.

CLOSING

This Bank Indonesia Circulation Letter shall come into force since October 30, 2007.

For the public to be infomed , it is ordered that this ordered that this Bank

Indonesia Circulation Letter be promulgated in the State Gazette of the Republic of

Indonesia.

Kindly be informed accordingly.

BANK INDONESIA,

(9)

ATTACHMENT 1 – CALCULATION / ANALYSIS OF FACTOR COMPONENT MATRIX

Attachment a Capital

Attachment b Asset Quality

Attachment c Earnings

Attachment d Liquidity

Attachment e Sensitivity to Market Risks

(10)

Suficiency in meet-ing the Capital Ad-equacy Ratio (CAR)

(Key Ratio) KPMM =

MM _tier + M _tier2 + M _tier3 – Placement

ATMR

• Capital calculation and Assets Weighted Risk are based on Bank Indonesia regulation regarding Commercial Bank Minimum Capital Adequacy Ratio based on sharia principles.

• Ratio is calculated at evaluation date

Objective:

To measure bank capital adequacy to overcome losses and compliance to CAR regulations.

Rating evaluation criteria: • Rating

KPMM ≥ 2% • Rating 2

9% ≤ KPMM < 2% • Rating 3

8% ≤ KPMM < 9% • Rating 4

6% < KPMM < 8% • Rating 5

(11)

Core capital ability and Allowances for Possible Losses (PPAP) in securing write-off risk (Supporting Ratio)

ECR =

M _tier + PPAP

APYD - Collateral

• Tier Capital calculation is based on Bank Indonesia regulation regarding Commercial Bank Minimum Capital Adequacy Ratio based on syariah principles. • Classiied Productive Assets are productive assets

that are no longer or potential not yielding income or generate losses of which its magnitude is determined as follows:

() 25% of the productive assets categorized as Special Mention

(2) 50% of the productive assets categorized as Sub Standard

(3) 75% of the productive assets categorized as Doubtful

(4) 00% of the productive asset categorized as Loss

• Ratio is calculated based on the position at evaluation date

Objective:

To measure the bank capital capability to absorb risk in case of write off to trouble assets

Rating evaluation criteria: • Rating :

ECR ≥ 4 • Rating 2

3 ≤ ECR < 4 • Rating 3

2 ≤ ECR < 3 • Rating 4

≤ ECR < 2 • Rating 5 ECR <

(12)

Core capital ability to cover losses at the time of liquidation (Supporting Ratio)

EDR =

M _tier1

DPKg

• Tier Capital calculation is based on Bank Indonesia regulation regarding Commercial Bank Minimum Capital Adequacy Ratio based on syariah principles.

• DPKg = Third Party Funds guaranteed by a bank is the entire third party funds, after deducted by amount guaranteed by Deposit Security Institution (LPS) and proit sharingfunds

• Ratio is calculated based on the position on the evaluations date

Objective:

To measure core capital capacity to cover third party funds in case of liquidation.

EDR* +0.4≤EDR • Rating 2

EDR* +0.2≤EDR<EDR*+0.4 • Rating 3

EDR*≤EDR<EDR*+0.2 • Rating 4

EDR* -0.2≤EDR<EDR* • Rating 5

(13)

4 EDR* = -(αDall_{/ D}ng) – α (EDR)

• EDR* is EDR at liquidation

• α is constant recovery rate of industry based on experience at liquidation. Presently stipulated at 30% (referring to the BPPN recovery rate data)

• Dall _{is total of third party funds}

• Dng_{is Third Party Funds proit sharing and funds not}

secured by LPS

EDR on liquidation Objective:

(14)

5 CAR trend /growth

(Supporting Ratio) %∆KPMM =

KPMM T+1

KPMM _T

• Capital growth projection data and ATMR next quarter using trend analysis. Open for input in case of a signiicant enough capital addition.

• Ratio is calculated at evaluation date position

Objective:

To identify whether the bank is operating within the acceptable risk taking capacity in order business expansion that indicated in the ATMR growth is supported by adequate capital growth.

%∆KPMM ≥ .2 • Rating 2

.≤%KPMM < .2 • Rating 3

≤%∆ KPMM < . • Rating 4

0.9≤%∆KPMM < • Rating 5

(15)

6 A bank internal capability to add capital

(Supporting Ratio)

IS = RR %∆ ATMR T+

• RR stands for Retention Rate obtained from the calculation of retained proit ratio in the Retained Proit Ratio formula.

• ATMR % growth data uses ATMR growth expectation next (one) period (next quarter) based on trend analysis (linear regression) and or bank business. • Ratio is calculated based on the position on the

evaluations date

Objective:

To measure capital growth from the bank internally to cover increasing risk that may occur.

Rating evaluation criteria: • Rating :

IS≥. • Rating 2

≤IS<. • Rating 3

0.9≤IS< • Rating 4

(16)

7 Retained Proit Ratio

(Retention Rate) RR =

Net Income – Dividend

M_tier

• Net income data is the accumulated Proit and Loss data during the last 2 months deducted by taxes payable.

• Dividend data uses the last 2 months dividend data

• Data of capital that used is the tier core capital data. The average capital calculation is as follows:

Example: For the month of June position: is the sum of capital as of January up to June divided by 6.

• RR Ratio use to calculate Internal Support ratio

Objective:

(17)

8 Intensity of the agency function of a sharia bank

(Observed ratio)

AR = DPK PS DPK _Total

• DPK_PS or Third Party Funds proit sharing are funds based on mudharabah agreement with proit sharing method

• DPK _Total is total third party funds

Objective:

(18)

9 Core capital compared to a mudharabah fund

(Observed ratio)

FP =

M _tier

DPK _PS

• DPK _PS or third party proit sharing funds are funds based on akad “mudharabah” with proit sharing method.

• Tier Capital calculation is based on Bank Indonesia regulation regarding Commercial Bank Minimum Capital Adequacy Ratio based on syariah principles.

• Ratio is calculated based on the position on the evaluation date

Objective :

(19)

0 Dividend Pay Out Ratio

(Observed ratio)

DPOR = Dividend Proit after tax

• Dividend is dividend that paid out to shareholders and reduce the amount of Bank capital

Objective:

(20)

Access to capital sources (external support)

(Observed ratio)

EPS = Proit after tax

Number of shares

• Dividend is dividend that paid out to shareholders and reduce the amount of Bank capital

Subscription level (Initial Public Offering or private placement)

• Oversubscribed or under subscribed

Bank or bank securities rating

Example of rating institutions are among others Peindo, Standard & Poor’s, Moody’s, and Fitch

Objective:

(21)

2 Financial performance of shareholders to increase the bank capital

(Observed ratio)

Shareholder rating

* Rating of corporate shareholder, if any

Shareholder track record:

(22)

A bank productive

asset quality (KAP)

(Key ratio)

Objective:

To evaluate sharia bank

productive

asset

quality. The higher ratio the better the

quality of syariah bank productive

assets

KAP = -

APYD (DPK, KL, D,M)

Productive Assets

• AYDA = Classiied Productive Assets are productive assets that are no longer or is potential not yielding income or generate losses which is determined as follows:

() 25% of the productive assets categorized as Special mention

(2) 50% of the productive assets categorized as sub standard

(4) 00% of the productive asset categorized as Loss • Calculation is based on Bank Indonesia regulation regarding Asset Quality Assessment, applicable to sharia bank

• Coverage of Productive Asset Components is subject to Bank Indonesia regulation regarding Asset Quality

Rating evaluation criteria:

•

Rating

KAP >0.99

•

Rating 2

0.96<KAP ≤0.99

•

Rating 3

0.93<KAP ratio≤0.96

•

Rating 4

0.90<KAP ratio≤0.93

•

Rating 5

(23)

2 Risk of concentrating fund distribution to main debtors (KRDI)

(Supporting ratio)

KRDI = Financing to main debtor Total inancing

• The main debtor data refers to the regulation of the Sharia Commercial Bank Periodical Report

Objective:

To measure core debtor risk level due to funds distribution concentration to core debtor

KRDI≤0% • Rating 2

0%<KRDI≤5% • Rating 3

5%KRDI≤20% • Rating 4

20%<KRDI≤25% • Rating 5

(24)

3 Fund disbursement quality to main debtors (KAPi)

(Supporting ratio)

APYD main debtor KAPi =

-AP main debtor

• Classiied Productive Assets (APYD) are productive assets that are no longer or is potential not yielding income or generate losses which are determined as follows:

() 25% of the productive assets categorized as Special Mention

(2) 50% of the productive assets categorized as Sub Standard

(4) 00% of the productive asset categorized as Loss

• The main debtor data refers to the regulation of the Sharia Commercial Bank Periodical Report

• Ratio is calculated based on the position of evaluation date

Objective:

To measure quality of funds distribution to main debtors

KAP > 0.99 • Rating 2

0.96,KAP≤0.99 • Rating 3

0.93<KAP≤0.96 • Rating 4

0.90<KAP≤0.93 • Rating 5

(25)

4 A bank ability to handle / to recover write-off assets

(Supporting ratio)

RV

ARR = Average x 00% WO

• RV or Recovery Value is amount of each inancing account successfully recollected after written off

• WO or Write Off is the amount as per inancing account already written off.

Objective:

To measure the bank capability to handle/ to recover write-off assets. The more capable bank in recovering write-off assets, the better.

ARR>40% • Rating 2

30%<ARR≤40% • Rating 3

20%,ARR≤30% • Rating 4

0%,ARR≤20% • Rating 5

(26)

5 The amount of non performing inancing (Supporting Ratio)

NPF = Financing (KL, D, M) Total funding

• The coverage of inancing component and inancing rating is subject to Bank Indonesia regulation regarding Assets Quality Rating for Commercial Banks Conducting Business Based on Sharia Principles.

Objective:

To measure the bank inancing problem level. The higher this risk, the worst a syariah bank inancing quality.

NPF < 2% • Rating 2

2% ≤NPF <5% • Rating 3

(27)

6 Collateral Adequacy Level

(Observed Ratio) _{TKA =} COLLATERAL (KL,D,M) AP (KL,D,M)

• Amount and type of Collateral based on regulations regarding Assets Quality Rating for Commercial Banks Conducting Business Based on Sharia Principles.

Objective:

(28)

7 Projection/growth of productive assets quality (PKAP)

(Observed ratio)

PKAP =

APYD _t+/ AP _t+

APYD _/AP

• Classiied Productive Assets (APYD) are productive assets that are no longer or is potential not yielding income or generate losses which are determined as follows:

a) 25% of the productive assets categorized as Special Mention

b) 50% of the productive assets categorized as Sub Standard

c) 75% of the productive assets categorized as Doubtful

d) 00% of the productive asset categorized as Loss

• The coverage of inancing component is subject to Bank Indonesia regulation regarding Assets Quality Rating for Commercial Banks Conducting Business Based on Sharia Principles

• Projection data APYD_t+ and Productive_t+ asset projection data using the last 24 months trend

Objective :

To measure possibility risk changes on assets owned by a sharia bank.

(29)

8 Growth/trend of restructured trouble productive assets.

(Observed ratio)

RP = Rstrk T / Pemb T

Rstrk _T-1 / Pemb _T-1

• Financing restructuring Growth Data is the amount of the restructured trouble inancing.

• Ratio is calculated per position on the evaluation date

Objective:

To measure bank activity effectiveness in implementing of restructured inancing.

(30)

Net Operating Margin (NOM)

(Key Ratio)

NOM =

(PO-DBH) - BO

Average AP

• Operating Income is operating Income after distribution of proit sharing within the last 2 (twelve) months.

• Operating expense is operating expense including deicit in PPAP from the amount to be derived in compliance with BI regulatory in the last 2 (twelve) months.

• Calculation of productive assets average is the average productive assets within the last 2 (twelve) months.

Objective:

To understand of productive assets capability in generating proit

NOM > 3% • Rating 2

2%<NOM≤3% • Rating 3

.5%<NOM≤2% • Rating 4

%<NOM≤.5% • Rating 5

(31)

2 Return On Asset

(Supporting Ratio)

ROA

=

Net Before Tax

Average TA

• Proit calculation before tax aggregated in one year is as follows:

Example:

For the month of June position = (accumulated proit per June position divided by 6) x 2.

• Average total asset calculation is as follows: Example:

For June position = aggregated total asset position for the month January up to June divided by 6.

Objective:

To measure management success in generating proit. The smaller ratio the lesser capability of a bank management to manage assets to improve income and or to suppress cost

ROA>.5% • Rating 2

.25%<ROA≤.5% • Rating 3

0.5%<ROA≤.25% • Rating 4

0%<ROA≤0.5% • Rating 5

(32)

3 Operating eficiency ratio (REO)

(Supporting ratio)

REO = BO PO

• Operating expense (BO) data used is operational expenses including deicit in PPAP.

• Operating income (PO) data used is operating income data after the distribution of proit sharing.

• Ratio is calculated per position on the evaluation date.

Objective:

To measure eficiency of bank sharia operational activity

REO ≤ 83% • Rating 2

83% < REO ≤ 85%% • Rating 3

85% < REO ≤ 87% • Rating 4

87% < REO ≤ 89% * Rating 5

(33)

4 Income generating assets ratio (IGA)

(Supporting ratio)

IGA = AP Current

TA

• Coverage of Current Productive Asset is productive assets with current and special mention rating are subject to Bank Indonesia regulation regarding Assets Quality Rating for Commercial Banks Conducting Business Based on Sharia Principles.

Objective:

To measure the total of Sharia bank assets

that could generate / provide income.

IGA > 83.3. % • Rating 2

80.75%, IGA ratio ≤ 83.3% • Rating 3

78.2% < IGA ratio ≤ 80.75% • Rating 4

75.65%, IGA ratio ≤ 78.2% • Rating 5

(34)

5 Income

diversiication (DP)

(Supporting Ratio)

DP =

Fee based Income

Income from funds distribution

• Fee based income is fee obtained by a bank from banking services provided.

• Income from funds distribution is income generated by funds distribution after deduction of proit sharing to the investor investing funds.

• Income data obtained from the last 2 months.

Objective:

To measure a syariah bank capability to generate income from fee based services. The higher fee-based income the less the bank dependency on funds distribution

DP > 2% • Rating 2

9% < DP ≤ 2% • Rating 3

6% < DP ≤ 9% • Rating 4

3% < DP ≤ 6% • Rating 5

(35)

6 Projection of Net Revenue (PPBO) (Supporting ratio)

((POu – DBH)-BOu) _t+1/ Average AP _t+1

((POu – DBH)-BOu) _t/ Average AP _t+1

• Data of growth revenue, proit sharing distribution, and operating expenses are trend data during 24 months.

• POu = operational revenue is accumulated income from a bank main activities during the last 2 months. Bank main activities income are among others income generated by murabahah, istishna, ijarah, mudharabah, musyarakah transactions / activities, inter bank placement in the form of savings and mudharabah deposit, transfer, bank guaranty, inkaso and L/C.

• DBH = accumulated proit sharing for investor of funds investment (excluding proit sharing for SIMA transaction) during the last 2 months. • BOu = operational expenses accumulation of

the bank main activities expenses during the last 2 months including deicit in PPAP. Bank main expenses are among others ijarah, premium, human resources, education and training, rent, campaign and PPAP expenses.

Objective:

To understand capability of the productive asset to generate proit in the next period.

PPO ≥ 04% • Rating 2

02% ≤ PPO < 04% • Rating 3

00% ≤ PPO < 02% • Rating 4

98% ≤ PPO < 00% • Rating 5

(36)

7 Net structural operating margin (NSOM)

(Observed ratio)

NSOM =

(PO_U + DBH) – BOu

Average AP

• Operational revenue is the accumulated income of the Bank main activities during the last 2 months. Bank main activity income among others are the income from the murabahah, isyishna’, ijarah, mudharabah, musyarakah, inter bank placement in the form of mudharabah saving and time deposit, transfer, bank guaranty, inkaso and L/C transactions / activities.

• Proit sharing distribution is the accumulation of proit sharing for investor of investment funds (not including SIMA production sharing) for the last 2 months period.

Objective:

To measure net income from the main

(37)

• Operational expense is the accumulation of a bank main activities expenses during the last 2 months including deicit in PPAP. Bank main activities expenses among others consist of ‘ijarah’, premium, human resources, education and training, rent, campaign and PPAP expenses.

• Productive asset average calculation is the average of last 2 (twelve) months productive asset. Productive assets provisions refer to regulation regarding Assets Quality Rating for Commercial Banks Conducting Business Based on Sharia Principles.

(38)

8 Return on Equity

(Observed ratio)

ROE = Net proit after tax Average paid up capital

• The proit calculation after annual tax projection Example:

For the month of June position = (accumulated proit per June position divided by 6) x 2.

• The average paid up capital calculation is as follows:

Example:

For the month of June position = accumulated paid up capital for the position January up to June divided by 6.

• The coverage of paid up capital include ‘agio’ and ‘disagio’

Objective:

(39)

9 Fund placement composition in securities/money market

Observed ratio

IdFR = SWBI + SB + Placement

AP

• Securities consist securities to other banks and non bank

• Placement includes placement to other banks. • Ratio is calculated per position on the evaluation

date

Objective:

(40)

0 Disparity between the highest and lowest compensation

(Observed ratio)

Disparity of compensation =

The highest compensation deducted by the lowest compensation

Objective:

(41)

Public education function

(Observed ratio)

CSR =

Public Education cost

BO

• Public education cost is relected by promotion cost.

Objective:

(42)

2 Social function

(Observed ratio)

Allotment (Tithe and Virtuous funds)

Core capital

Distribution (Zakah and Genevolence funds)

Core capital is M _tieras referred regulation regarding Minimum Capital Adequacy Ratio For Commercial Banks Based on Sharia Principle.

Objective:

(43)

3 The correlation between interest rate in the market and the return (proit sharing) given by a sharia bank

(Observed ratio)

Return correlation R corr = Corr (r,i)

= the correlation between a mudhabarah time deposit return level with a deposit interest rate

• Corr(r,i) is a correlation between month mudhabarah time deposit return level to the month time deposit interest rate.

• R data is a month mudharabah time deposit return level.

• I data is a month time deposit interest rate.

• The higher the correlation between the interest rate with the return level provided by a sharia bank to their customer show syariah bank sensitivity towards interest rate luctuations.

Objective:

(44)

4 Investment ratio (Observed ratio)

Proit sharing account =

Distribution of profit sharing

Average DPK profit sharing

• Proit sharing distribution data is the amount of proit sharing to the investor investing funds.

• Annual investment proit sharing funds distribution calculation.

Example: For June position = (accumulated proit sharing distribution up to June / 6) x 2.

• The investment average calculation is as follows: Example: for the June position = accumulated total investment as of January up to June divided by 6

Objective:

(45)

5 Written off funds distribution compared to

operational expense (Observed ratio)

Write off Expense (WOE) =

Write off expense

Operational expense

• Written Off Funds distribution data are written off debit balance during the last 2 months.

• Operational expense data are operational expenses during the last 2 months

Objective:

(46)

The amount of the short term asset compared to the short term liability

(Key Ratio)

STM = Short Term Asset Short Term Liability

• Short term assets are liquid assets that less than 3 months excluding cash, SWBI and Sharia Governemnet Securities (SBSN) in the maturity proile report as referred in the Sharia Commercial Bank Periodical Report.

• Short-term liabilities are liquid liability that less than 3 months in the maturity proile report as referred in the Sharia Commercial Bank Periodical Report.

* Ratio is calculated per position on the evaluation date

Objective:

To measure the bank capability to meet short term liquidity needs

STM > 25% • Rating 2

20% < STM ≤ 25% • Rating 3

5% < STM ≤ 20% • Rating 4

0% < STM ≤ 5% • Rating 5

(47)

2 Capability of short term asset, cash, and secondary reserve to cover short term liability (Short Term Mismatch Plus / STMP )

(Supporting ratio)

STMP = Short Term Assets + Cash + Secondary Reserve

Short Term Liability

• Short term assets are liquid assets that less than 3 months excluding cash, SWBI and Sharia

Governemnet Securities (SBSN) in the maturity proile report as referred in the Sharia Commercial Bank Periodical Report

• Short-term liabilities are are liquid liability that less than 3 months in the maturity proile report as referred in the Sharia Commercial Bank Periodical Report.

• Cash is cash on hand.

• Secondary reserves are Certiicate Wadiah Bank Indonesia (SWBI) plus Sharia Goverment Securities (SBSN).

Objective:

To measure the bank capability to meet short term liability need by utilizing short term assets, cash and secondary reserve

STMP ≥ 50% • Rating 2

40% ≤ STMP < 50% • Rating 3

30% ≤ STMP < 40% • Rating 4

20% ≤ STMP < 30% • Rating 5

(48)

3 Dependency on main deposit fund

Main Time Deposit Ratio (RDI)

(Supporting Ratio)

RDI = DPK main

DPK

• Main Time Deposit data referred in the Sharia Commercial Bank Periodical Report.

Objective:

To measure dependency of sharia bank on funds from main time deposit or sharia bank funding concentration to main time deposit. The higher RDI ratio, the greater is the liquidity risk faced by a sharia bank

RDI < 5% • Rating 2

5% ≤ RDI <0% • Rating 3

0% ≤ RDI < 20% • Rating 4

20% ≤ RDI < 30% • Rating 5

(49)

4 Growth of main deposit fund to the total fund of third parties

Main Time Deposit Ratio Growth

(Supporting Ratio)

PRDI = DPKDPK _{int /t+1ier1} / DPK _t+1

DPK _{int / t} / DPK ₁

• Main Time Deposit data referred in the Sharia Commercial Bank Periodical Report.

• DPK is Total Third Party Funds.

• DPK main _t+and DPK _t+are calculated using 2 months trend analysis.

Objective:

To measure dependency level of sharia bank on main time deposit

PRDI < 98% • Rating 2

98% ≤ PRDI < 00% • Rating 3

00% ≤ PRDI < 02% • Rating 4

02% ≤ PRDI < 04% • Rating 5

(50)

5 The bank capability in obtaining funds from other parties in the case of mismatch

Ratio Contingency Plan (RCP)

(Observed ratio)

RCP = Expected Liquidity Aid DPK_inti + Net Short Term Liability

• Expected Liquidity Aid data is a facility provided by other party that a sharia bank could use it any time.

• Main Time Deposit data referred in the Sharia Commercial Bank Periodical Report .

• Short time net liabilities are: short term liabilities – (short term assets + cash + secondary reserve, and if the result is negative, it is considered as 0 (zero)). • Short term assets are liquid assets that less than

3 months excluding cash, SWBI and Sharia Governemnet Securities (SBSN) in the maturity proile report as referred in the Sharia Commercial Bank Periodical Report.

• Short-term liabilities are are liquid liability that less than 3 months in the maturity proile report as referred in the Sharia Commercial Bank Periodical

Objective:

(51)

• Secondary reserve is Bank Indonesia Wadiah Certiicate (SWBI) plus Sharia Governemnet Securities (SBSN)

(52)

6 Dependency on inter bank fund

Inter Bank Liabilities Ratio (RABP)

(Observed ratio)

RABP = Inter Bank Liabilities Total Liabilities

• Inter Bank Liabilities are all of bank liabilities to other banks.

• Total Liabilities consist of Third Party Funds, Inter Bank Liabilities, Financing received, and Securities issued as referred in the Sharia Commercial Bank Periodical Report.

Objective:

(53)

Capital Adequacy to cover market risks (exchange rate luctuation)

(Key ratio)

MR = Capital excess

Potential Loss of Exchange rate

• Capital excess is surplus in capital requirement to cover market risk caused by exchange rate luctuation.

• Calculation on capital excess refers to regulation regarding minimum capital adequacy requirement for commercial banks based on sharia principles. • Potential loss of Exchange rate is loss risk caused

by exchange rate luctuation contrary to a bank forecast (gap position from the foreign currency exposure banking book multiplied by foreign currency exchange rate luctuation).

• Potential loss data are obtained from the bank historical data.

• Ratio is calculated per on the evaluation date

MR ≥ 2% • Rating 2

0% ≤ MR < 2% • Rating 3

8% ≤ MR < 0% • Rating 4

6% ≤ MR < 8% • Rating 5

MR < 6% Objective:

(54)

The Bank determined an effective governance structure & mechanism

a. The bank has an effective governance structure (conform with the characteristic, size and complexity, inancial ability, as well as strategic goals of the bank) to carry out and accomplish strategic goals in line with the vision, mission and its function as a sharia bank, in accordance with prevailing laws and regulations.

. The Board of Commissioners consists of at least 3 (three) persons and should not exceed the number of the Board of Directors.

2. The Board of Directors consist of at least 3 (three) persons.

3. The Board of Directors has established an Internal Audit Working Unit (SKAI), a Risk Management Working Unit (SKMR), a Risk Management Committee, and a Compliance Working Unit.

4. The Audit Committee consist of at least one Independent Commissioner, one independent party with inancial or accounting expertise, and one independent party with legal or banking expertise..

5. The Audit Committee lead by an Independent Commissioner.

6. The majority of the Audit Committee consist of Independent Commissioners and independent parties.

7. The Risk Monitor Committee consist of at least one Independent Commissioner, one independent party with inance expertise, and one independent party with risk management expertise.

8. The Risk Monitor Committee lead by an Independent Commissioner. 9. The majority of the Risk Monitor Committee consist of Independent

Commissioners and Independent parties.

(55)

2. In case that the Remuneration and Nomination Committee consist of more than 3 (three) persons, it should have at least 2 (two) Independent Commissioners.

3. A Compliance Working Unit is independent from the operational working unit.

b. The Bank stipulates goals, duty, delegation of authority mechanism, and a clear standard operating procedures including the provision of satisfactory supporting facilities and adaptive towards policy changes and internal as well as external conditions. Included in stipulation of the delegation of authority mecahnism and standard operating procedures is the DPS communication mechanism with the Compliance Director, SKAI and SKMR

. The management settled on strategic policy and decision through the mechanism of Board of Directors meetings.

2. Resolutions in a Board of Directors meeting shall be adopted based on deliberation for consensus or majority votes.

3. The results of a Board of Directors meeting is documented in a minutes of meeting and should be properly documented, including dissenting opinions (if any).

4. The management does not take any advantage and or receive any personal advantage from the Bank except the remuneration and other beneits stipulated in the Shareholders Meeting.

5. There is a system and procedure to submit recommendation regarding the election and or replacement of members of the Board of Commissioner, Board of Directors and DPS to the Board of Commissioners.

(56)

Independent Commissioners and Independent parties.

8. Remuneration and Nomination Committee meetings should be attended by at least 5% (ifty one percent) of the members including Independent Commissioners and Executive Oficer.

9. Resolutions of committee meetings shall be adopted based on deliberation for consensus or majority votes.

0. Committee minutes of meeting should be properly documented, including dissenting opinions (if any).

. The Compliance Working Unit is responsible for conformity of guidance, system and procedure of all Working Unit with the prevailing laws and regulations. The Board of Directors should agree to the Bank compliance policy in the form of formal document regarding effective compliance function.

2.The Board of Directors is responsible to establish an effective and permanent compliance function as a part of the bank compliance policy as a whole.

3 The Compliance Director periodically reports the implementation of his (her) duty to the President Directors and the Board of Commissioners (as copy carbon).

(57)

6 The SKAI implement its duty by at least covering assessment on: • Adequacy of Bank Internal Control System

• Effectiveness of Bank Internal Control System • Performance Quality

• Compliance toward syariah principles in connection with syariah banking operation

7 The SKAI has reported the whole audit indings including matters related to syariah aspect according to prevailing laws and regulations. 8 The SKAI has periodically prepare and update the working guidance as

well as system and procedure including for syariah audit purposes. 9 Assignment of an Accountant Public and a Public Accountant Ofice

(KAP) must have prior approval from the Shareholders General Meeting based on Audit Committee recommendation.

20 A Bank Strategic Planning is prepared in the form of Corporate Plan and Business Plan in line with the bank’s vision and mission

2 The Corporate and Business Plan is prepared by the Board of Directors and approved by the Board of Commissioners.

22 The Bank has a procedure and working mechanism that regulate the relationship between the DPS, SKAI, Compliance Directors and SKMR. 23 The Bank provide satisfactory supporting facilities to support the duty

(58)

DPS, The Committees, and Executive Oficer implement their duty consistently in accordance with the stipulated authority, mechanism and standard operating procedures.

and responsibility as stipulated in the Articles of Association and prevailing laws and regulations.

3. The Board of Directors has been responsible for their duty to the shareholders through the General Meeting of Shareholders. 4. The Audit Committee conduct a review on the planning and audit

implementation as well as monitor the follow up on audit result in line with satisfactory internal control including satisfactory inancial report. 5. The Audit Committee provides recommendation an Accountant

Public and Accountant Public Ofice (KAP) assignment to the General Meeting of Shareholders through the Board of Commissioners. 6. The Audit Committee conducts a review on the SKAI duty

implementation, audit implementation compliance to prevailing audit standards, consistency of the inancial report with valid accounting standard and follow-up implementation by the Board of Directors. 7. The Risk Monitoring Committee observed the policy evaluation and

risk management implementation and Risk Management Committee duty to provide recommendation to the Board of Commissioners. 8. The Remuneration Committee has provided recommendation

(59)

0. Recommendation on candidate member of the Board of

Commissioners, Board of Directors and DPS to the General Meeting of Shareholders shall be through the Board of Commissioners.

. Recommendation on independent parties as committee member to the Board of Commissioner.

2. A periodical external review (every three years) on the SKAI

implementation and compliance to the Bank Internal Audit Function Control Unit (SPFAIB).

3. The Bank assigns a Public Accountant and a Public Accountant Ofice (KAP) registered with Bank Indonesia and is competent to audit syariah banks.

4. Audit assignment to an Accountant Public and a Public Accountant Ofice (KAP) should at least meet the following aspects:

• competency of the assigned Public Accountant Ofice; • legality of working agreement;

• audit scope;

• audit standard; and

(60)

DPS, The Committees and Executive Oficer in a real form has and utilizes the control span and appropriate supporting infrastructure (including management information system) in accordance with their duty and authority

2. The availability of internal reporting is supported by a reliable Management Information System (MIS)

3. The availability of appropriate information system supported by competent human resources.

4. The availability of appropriate security system.

e. Every member of the Board of Commissioners, Board of Directors, DPS, The Committees, and Executive Oficer posses appropriate qualiication, properly maintained and acceptable to the stakeholders (among others employees, share-holders, and customers).

. At least (one) member of the Board of Commissioners domiciled in Indonesia.

2. The majority of Commissioners consists of Independent Commissioners.

3. Changes and or nomination of a Commissioners must observe the recommendation from Nomination Committee or Remuneration and Nomination Committee.

4. A Commissioners should possess integrity, suficient competency and reputation in inance, in accordance with the it & proper test requirement.

(61)

7. Changes and or nomination of a Directors must observe the recommendation from Nomination Committee or Remuneration and Nomination Committee.

8. The majority of the members of Board of Directors should possess at least 2 (two) years experience in operational ield as an Executive Oficer of a sharia bank.

9. A Directors should possess integrity, suficient competency and reputation in inance, in accordance with the it and proper test requirements.

0. DPS members should possess integrity, suficient competency and reputation in inance, in accordance with prevailing regulations. Competency among others can be measured through sharia opinion and consideration given by the DPS.

. Members of the Audit Committee should possess integrity i.e. good character and moral.

(62)

DPS, and Executive Oficer should be able to implement corporate culture value in a proper and consistent manner.

by the bank.

The Bank must have a mechanism to identify, prevent, and minimize the occurrences of conlict of interest

a. A member of the Board of Commissioners, Board of Directors, Executive Oficer (including Branch Manager) having a conlict of interest should not be involved in decision making.

There is no member of the Board of Commissioners, Board of Directors and Executive Oficer (including head of branch) who has a conlict of interest involved in the decision making.

2

b. If a member of the Board of Commissioners, Board of Directors, Executive Oficer (including Branch Manager) has a conlict of interest involved in the decision making,

(63)

of Directors, DPS, and Executive Oficer indicating to have conlict of interest is a decision detrimental to a bank either inancially or non-inancial.

d. The Bank has and enforce internal policy regarding:

(i) regulation of conlict of interest binding to every executive and employee of the bank; and (ii) administration notes,

documentation and disclosure of the conlict of interest mentioned in the minutes of meeting.

(64)

and Board of Directors.

2. The President Director is an independent party towards the controlling shareholders.

3. The majority of the members of a Board of Directors are not related up to the second layer to another member of a Board of Directors and / or member of a Board of Commissioners

4. The board of Commissioners and the Board of Directors must be independent from related parties and or certain major debtor. 5. A member of Board of Directors, Board of Commissioners and

DPS both individually or collectively do not own more than 25% (twenty ive percent) share from the paid up capital to the bank or in another company.

6. Provision of procurement service and other professional service is in line with the term and condition of a bank..

Commissioners, Board of Directors, DPS, and Executive Oficer have the capability to act independently and minimize every possibility that may lessen professionalism in the decision making.

of Board of Directors, Board of Commissioners, shareholders and DPS, and relationship between a Board of Directors and Board of Commissioners with the implementation of a bank business (among others through procurement service & other professional services)

b. In the assessment period there is no violation committed on rules regarding concurrent positions.

(65)

& professional service) that causes transfer of duty as welll as authority and decision making of the Board of Directors, DPS and Executive Oficer non independently.

the Director.

2. A member of Board of Directors may not utilize personal consultant and or professional service as a consultant except for special projects, based on a clear contract covering work scope, responsibilities, duration of work and cost.

d. The DPS stipulate syariah opinions professionally.

The DPS syariah opinion or consideration has meet the regulation and not inluenced by other party.

The Bank e m p l o y e d the strategy and two way communication.

a. The Bank implement transparency on inancial and non-inancial condition to the shareholders in accordance with the GCG principles and the prevailing regulations.

. The Board of Directors has disclosed the bank strategic policies related with the employment to the employees.

2. The Board of Directors has disclosed their share ownership and or inancial relationship to a concerned bank as well as to other banks and companies (domestically as well as abroad).

3. The Board of Directors has disclosed their family relationship with members of the Board of Commissioners, Board of Directors and or shareholders.

4. The Board of Directors has disclosed their remuneration and other beneits in the GCG report.

(66)

6. The Board of Directors report to Bank Indonesia concerning the implementation of Compliance Directors and internal audit function.

7. The Bank implement transparency on inancial and non-inancial condition to the stakeholders including to announce Quarterly Publication of Financial Statement and report to Bank Indonesia in accordance with the prevailing regulation.

8. The Bank prepares and presents reports with the procedure, type and coverage as regulated in the Bank Indonesia provisions concerning Bank Financial Condition Transparency.

9. The Bank submitted their Annual Report at least to:

l Bank Indonesia

l YLKI (Indonesia Consumer Institution Foundation)

l Rating institution in Indonesia:

l Bankers Association in Indonesia

l LPPI;

l 2 (two) Economic and Financial Research Institution

(67)

related to the development of two ways communication with their shareholders internally as well as externally

of organization in the Bank.

2. The Bank submit the inancial and non-inancial information among others in a homepage (for those who have homepage), printed publication media, electronic media and others.

c. In line with the strategy and mechanism of communication, the bank supports a two-way communication.

. The Bank provides suficient means available to the customer (hot line/help desk) to convey the problem related to the bank business activity.

2. The response given by the Bank upon customers’ complaint regarding bank services.

3. Measured by survey or questionnaire held by the Bank or a survey consultant hired by the Bank.

d. The Bank attempted transparency on bank product to avoid misleading information and to avoid the unethical usage (misconduct) on the customers’ personal data that may cause inconvenience to the customer.

. The Bank practiced transparency on bank product as regulated in Bank Indonesia provisions regarding Bank Product Information Transparency.

(68)

related with product development plan

(69)

d e t e r m i n e d an effective g o v e r n a n c e structure & mechanism

structure (conform with the characteristic, size and complexity, inancial ability, as well as strategic goals of the bank) in line with the vision, mission and its function as a syariah bank, in accordance with prevailing laws and regulations.

namely at least one level below the Board of Directors.

2. The Board of Directors has established an Internal Audit Working Unit (SKAI), a Risk Management Working Unit (SKMR), a Risk Management Committee, and a Compliance Working Unit that also responsible for syariah compliant,

3. The GCG assessment in general still refer to GCG assessment of the Parent Bank.

b. The Bank stipulates goals, duty, delegation of authority mechanism, and a clear standard operating procedure including the provision of satisfactory supporting facilities and adaptive towards policy changes and internal as well as external conditions. Included in the stipulation of delegation of authority mechanism and standard operating procedure is the DPS communication mechanism with the Compliance Director, SKAI and SKMR

. The Board of Directors involved the UUS Executive in preparing strategic policies and decision making in connection with syariah business activity via Board of Directors meeting mechanism.

2. Resolutions in a Board of Directors meeting shall be adopted based on deliberation for concensus or majority votes.

3. The results of a Board of Directors meeting is documented in a minutes of meeting and should be properly documented, including dissenting opinions (if any).

4. The UUS Executive has his/her duties and responsibilites at least according to prevailing provisions. (PBI No.8/3/PBI/2006).

(70)

laws and regulations, including compliance to syariah provisions. 7. The SKAI implement its duty by at least covering assessment on:

• Adequacy of Bank Internal Control System • Effectiveness of Bank Internal Control System • Performance quality

• Compliance toward syariah principles in connection with syariah banking operations

8. The SKAI has reported the whole audit indings including matters related to syariah aspect according to prevailing laws and regulations.

9. The SKAI has periodically prepare and update the working guidance as well as system and procedure including for syariah audit purposes.

0. Assignment of a Accountant Public and a Accountant Public Ofice (KAP) must have prior approval from the Shareholders General Meeting based on Audit Committee recommendation.

. In line with the Bank’s vision and mission in developing syariah business, the Bank Strategic Planning is prepared in the form of Corporate Plan and Business Plan.

(71)

c. Consistent with the stipulated authority, mechanism and standard opertaing procedures, the UUS Executive with the supporting group and DPS conduct their duty.

. The Board of Directors together with the UUS Executive are fully responsible for the implementation of sharia business.

2. The UUS Executive has been responsible to the Board of Directors for his/her duties.

3. Recommendation on candidate member of DPS is submitted to the Shareholders General Meeting through the Board of Commissioners.

4. The Bank assigns a Accountant Public and a Accountant Public Ofice (KAP) registered with Bank Indonesia and is competent to audit sharia banks.

d. The UUS Executive with the supporting group and DPS, in a real form have and utilize their span of control and appropriate supporting infrastructure (including management information system) in accordance with their duty and authority

. The Bank compliance system has qualiied resources to handle their task effectively including having knowledge in sharia banking operation.

2. The availability of internal reporting is supported by a reliable Management Information System (MIS).

3. The availability of a appropriate information system is supported by competent human resources.

(72)

human resources assigned in the UUS and DPS possess appropriate qualiication, properly maintained and acceptable to the stakeholders (among others employees, shareholders, and customers).

2. DPS members should possess integrity, suficient competency and reputation in inance, in accordance with prevailing provisions. Competency among others can be measured through syariah opinion and considerations given by the DPS.

3. Human resources assigned to the UUS is in accordance to the requirements to support the syariah banking development according with the vision and mission stipulated by the bank.

f. The UUS Executive with the supporting group and DPS should be able to implement corporate culture value in a proper and consistent manner.

The UUS Executive with the supporting group, DPS, and the Executive Oficer should not violate the corporate culture value stipulated by the Bank.

The Bank must have a mechanism to identify, prevent, and minimize the occurrences

a. The UUS Executive and the Executive Oficer (including the Branch Manager) having a conlict of interest should not be involved in decision making.

There is no parties who has a conlict of interest involved in the decision making.

(73)

the Branch Manager) has a conlict of interest involved in the decision making, an appropriate disclosure of each resolution must be made.

c. Resolutions taken by the UUS Executive and the Executive Oficer (including the Branch Manager) and DPS indicating to have conlict of interest is a decision detrimental to a bank either inancially and non inancial.

d. The Bank has and enforce intern policy regarding:

i. regulation of conlict of interest binding to every executive and employee of the bank; and ii. administrative notes,

documentation and disclosure of conlict of interest mentioned in the minutes of meeting.

The resolutions do not cause a loss or reduce the Bank’s proit.

(74)

E x e c u t i v e Oficer and DPS have the capability to act independently and minimize every possibility that may lessen professionalism in the decision making

of Board of Directors, Board of Commissioners, shareholders and DPS.

2. DPS sharia opinion or consideration has meet the regulation and not inluenced by other parties.

b. In the assessment period there is no violation committed on rules regarding concurrent positions

DPS does not violate the rule regarding concurrent poistion in accordance with prevailing regulations.

c. There is no other party involvement (among others personal consultant & professional services) that causes transfer of duty as well as authority and decision making of the UUS

. The UUS Executive may not give a general power of attorney to other party that cause a transfer of duty and function of the UUS Executive.

2. The UUS Executive may not utilize private consultant and or

(75)

The Bank e m p l o y e d the strategy and two way communication.

a. The Bank implement transparency on inancial and non inancial condition to the shareholders in accordance with the GCG principles and the prevailing regulations.

1. The Board of Directors has disclosed the bank strategic policies related with the employment to the UUS Executive and the team. 2. The UUS Executive has disclosed his/her assets prior to his/her

nomination as UUS Executive.

3. The Bank implement tranparency on inancial and non inancial condition related with the sharia business activity to the

stakeholders imcluding to announce Quarterly Publication of Financial Statement and report to Bank Indonesia in accordance with the prevailing regulation.

4. The Bank prepares and presents reports related with sharia business activity with the procedure, type and coverage as regulated i